Reading International Theater Chain Gets Takeover Approach

(Bloomberg) -- Reading International Inc., the owner of the Angelika and City Cinemas movie theaters, has received a takeover approach from a group of investors including Patton Vision LLC, private equity firms TPG and Madison Dearborn Partners and the Santo Domingo Group.

The nonbinding proposal values Reading International at $444 million, according to a letter to the company's board that was reviewed by Bloomberg. Including $151.1 million of debt, the offer totals about $595.2 million, the letter, signed by Patton Vision founder Paul Heth, shows.

Reading International's New York-listed shares, after rising as much as 11 percent, closed up 6.6 percent at $15.29 apiece, valuing the company at $376 million.

The missive is the latest attempt by Patton Vision to acquire Los Angeles-based Reading International. A previous offer of $18.50 a share in 2016 that also included backing from TPG and others was rebuffed. The new proposal expires Nov. 21, according to the letter, which is dated Monday.

Based on the average premium to the company's closing prices on Nov. 2, the latest offer values Reading International's Class A common stock at $17.22 per share and the Class B common stock at $37.38 apiece, the letter says.

Reading International's board of directors will review the unsolicited indication of interest in due course, the company said in a statement Tuesday.

Heth and representatives for TPG, Madison Dearborn and Santo Domingo declined to comment.

Engage, Negotiate

Reading International's special committee of independent directors “ought to engage and negotiate with Patton Vision to determine its maximum price before rejecting any transaction out of hand,” said Andrew Shapiro, president of Lawndale Capital Management, which holds both A and B class shares in the company. He also urged Reading International to retain financial advisers to evaluate the offer.

Patton Vision says that its offer is at a higher multiple than recent deals in the industry, including Cineworld Group Plc's acquisition of Regal Entertainment Group or Silver Lake Partners' strategic investment of $600 million in AMC Entertainment Holdings Inc.

The move represents a bet that the movie-theater industry can bounce back from a rough stretch. Cinema attendance has been growing again in 2018 after years of declines, and the trend is expected to continue into next year.

Big-City Focus

Reading, which is run by the Cotter family, boasts a number of big-city venues. Its Angelika Film Center unit, an art-house chain, has locations across the U.S. The company's City Cinemas division has five theaters in Manhattan, including Beekman and Village East. Reading International also operates the Royal George Theatre in Chicago, and two off-Broadway stages in New York: the Orpheum and Minetta Lane theaters.

Its investors have included Mark Cuban, who also owns a stake in Landmark Theaters -- another chain that has drawn takeover interest.

To contact the reporter on this story: Nabila Ahmed in New York at nahmed54@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha

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